There is a saying, “It takes one to know one.” I am a convicted felon, former CPA, and former criminal CFO of Crazy Eddie. Today, I teach law enforcement agencies, professionals, and businesses how to identify fraud and train them to catch the crooks. This blog investigates white-collar crime, securities fraud, accounting irregularities, corruption, and other related topics. Accounting irregularities investigated by me are referred to appropriate government agencies as a whistleblower.

Sunday, November 16, 2008

My dear friend and mentor convicted felon turned fraud fighter Barry Minkow has a message for deceitful directors and officers of public companies: If you lie about your resume, past experience, and qualifications for your present job and such lies show up in SEC filings, he will find out about it and expose you to investors and regulators.

Minkow and I believe that if you lie about your educational background, you are capable of lying about anything else, too. Investors require honesty from the fiduciaries running their companies. If Barry Minkow can find false credentials in corporate America where company gatekeepers have failed, what other more devastating internal control failures exist that we do not know of?

According to an article in the Wall Street Journal article by Keith Winstein, a survey of 358 senior executives and directors at 53 publicly traded companies conducted by Barry Minkow and his private investigation firm, the Fraud Discovery Institute (FDI), found at least seven instances of claims that individuals had academic degrees they don't have. In other words, about one of seven companies surveyed by FDI has directors and key executives that misrepresented their credentials.

You can read FDI’s background reports on those individuals above, here.

A day later, Barry Minkow exposed yet another corporate executive who touted phony credentials. According to an article in Bloomberg News, written by Beth Jinks, the latest executive to get busted by Minkow for phony credentials is MGM Mirage (NYSE: MGM) Chairman and Chief Executive Officer Terry Lanni:

Asked by news organizations if he graduated with a master of business administration degree at the University of Southern California, as his company biography says, Lanni replied that he has an honorary MBA from the school. James Grant, a university spokesman, said Lanni had taken courses toward an MBA but wasn’t granted the degree. Grant said he couldn’t verify that the school gave him an honorary degree.

“If it needs to be corrected, it will be corrected,” Lanni said in today’s interview when asked about his biography.

Lanni promptly announced his retirement. Good riddance.

As a convicted felon, I have learned that where there is smoke there is usually fire. In a series of future blog posts, I will carefully examine financial disclosures by companies that seem unable or unwilling to screen their executive’s and director’s backgrounds.

To be continued.

Written by:

Sam E. Antar (former Crazy Eddie CFO and a convicted felon)

Disclosure

I am not short or long any of the companies named in this blog post. However, Barry Minkow may have a short position in the companies mentioned in this blog post.

Over a year ago, I provided funds to Fraud Discovery Institute (FDI) to help pay costs of its investigations, though I had no control over any monies spent. I am not an owner, manager, employee, or consultant of Minkow or FDI and I do not receive any compensation from them.

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“White collar crime is more brutal than violence crime. The actions of one or a few corrupt public officials and corrupt businessmen affect the livelihoods of thousands of people. Treat them with the same disdain as we do treat serial killers because white collar criminals are economic predators. We are serial economic predators." -- Testimony of Sam Antar